Dow Rises as Federal Reserve Decision Looms
As Wall Street prepares for this week’s Federal Reserve meeting, the S&P 500 approaches a potential record high. On Monday, the index was flat, hovering just below its previous record close of 6890.89 set on October 28. The Dow Jones Industrial Average experienced a decline of 145 points, down by 0.3%, while the Nasdaq Composite gained 0.3%. Meanwhile, the yield on the 2-year Treasury note rose to 3.58%, and the 10-year yield increased to 4.15%.
Upcoming Federal Reserve Meeting and Market Expectations
The Federal Open Market Committee (FOMC) is set to begin a two-day meeting on Tuesday. Market traders are anticipating a significant decision regarding interest rates, with an 87.4% likelihood of a quarter-point cut on Wednesday. Chris Larkin, managing director of trading and investing at E*TRADE from Morgan Stanley, remarked, “A rate cut might not be a slam dunk.” However, he also noted that recent data reflecting labor-market softness and persistent inflation fuels optimism among investors.
Impact of Chair Powell’s Press Conference
Chair Jerome Powell’s press conference may heavily influence market reactions following the meeting. Additionally, traders will closely watch the Summary of Economic Projections (SEP), helping to clarify the Fed’s outlook on interest rates, the economy, and inflation.
Nicholas Colas, co-founder of DataTrek Research, stated, “The last SEP projected only one rate cut in 2026, suggesting a target rate of 3.25-3.50 percent.” Given the recent labor market weaknesses, he anticipates two cuts of 25 basis points may be presented, which would align better with current market expectations and indicate a gradual easing in the coming years.
Corporate Earnings and AI Stocks
This week, Wall Street will also receive earnings reports from major companies, including Oracle, Broadcom, Adobe, and Costco Wholesale. Traders are particularly focused on Oracle and Broadcom, both influential players in the artificial intelligence sector. Positive results and insights from these companies are essential as concerns about AI stocks surface.
Additionally, the technology sector saw a boost after International Business Machines (IBM) announced its acquisition of data infrastructure firm Confluent in an $11 billion deal, reinforcing interest in AI-related stocks.
